GreenTrees: modified leases and the greening of commerce

GreenTrees — self-described as “a privately managed forest restoration and carbon sequestration program created for landowners within the seven states of the Lower Mississippi Alluvial Valley” — aims to eventually have 1 million acres in the program. Recent changes in the program’s lease requirements will help achieve that goal.

“We’re completing a few planting projects as we speak,” says Page Gravely, GreenTrees senior director for landowner enrollment and program marketing, in mid-November. “At the end of this year, we’ll have about 5,000 acres total planted. About 3,500 acres of that is in Arkansas at about 25 different locations.”

In Arkansas, the largest contiguous tract, 635 acres, is going in this winter near Fort Smith.

“The largest tract we’ve planted so far (about 1,500 acres) is on a single agriculture property just south of Tallulah, La., next to the Tensas River National Wildlife Refuge. That’s on the Petrus property and was planted last winter. It’s really become the flagship for the program.”

The new Petrus forest was in agriculture for 45 years before the farmer retired.

“The Madison Parish NRCS had been talking to the landowner family to put the land in CRP,” says Gravely. “We were introduced to them by a tree planter. The soils are perfect for cottonwood/hardwood and so the family simultaneously enrolled in both CRP and GreenTrees. Around 98 percent of the trees survived and the cottonwoods are already at 20 feet. Some of the hardwoods are already at 6 feet. It’s a beautiful piece of property.”

All told, with 5,000 acres in the program and 604 trees per acre, almost 3 million new hardwoods have been planted since GreenTrees’ launch.

Lease revamp

While making their pitch over the last few years, representatives of GreenTrees have found Mid-South landowners extremely interested in conservation, planting forests and gaining income from the resulting carbon sequestration. But, unwilling to tie themselves to a 70-year lease, many refrained from signing on.

Now, lease length is no longer a hindrance.

“Three years ago, we knew the 70-year term would create heartburn for many landowners,” says Chandler Van Voorhis, GreenTrees managing partner. “But we had no choice. The way the carbon market was at the time, we had to demonstrate permanence based on what was acceptable. To get a good return for us and the lead investor (at the time, Duke Energy), we had to basically guarantee, or mitigate, the risk that the trees would be deforested. That’s why there was a need for a long-term lease.”

Many landowners interested in GreenTrees are considering converting agriculture land or marginal ground.

“When working with crops, their mindset is ‘one year at a time.’ And we were asking them to commit to non-deforestation for 70 years,” says Gravely. “That forced them to make decisions with multi-generational impacts for their family.

“We knew that was a barrier. The landowners that did enroll felt very comfortable that the land would remain in trees — and they want it to remain in trees — whether for recreational value, increased property value, estate planning, their own beliefs in conservation, etc.”

For every landowner who has enrolled in GreenTrees, Gravely suspects seven to 10 turned enrollment down “primarily due to the long-term lease.”

Recently, ACR (American Carbon Registry — a non-profit offshoot of Arkansas-based Winrock International), one of three well-known carbon registries in the country, launched version 2.0 of its forestry standard. ACR is the oldest private registry in the United States with in excess of 30 million tons of carbon.

“Basically, ACR’s updated standard allowed us, instead of the landowner, to absorb the risk long-term. ACR defines permanence as a 40-year period instead of 70 years. Given our planting regime and forest management plan, GreenTrees carbon occurs in the first 15 years. After that time, no new carbon occurs unless the landowner chooses to forgo his timber rights. Thus, we could offer the landowner a 15-year production lease. In turn, we’re on the hook to ACR — not the landowner — for carbon permanence for 40 years. We just want the landowner to do what he does best: produce.”

Why is GreenTrees willing to shoulder that risk?

“When you look at the statistical data for landowners, a very small percentage that establish trees put that land back into some other use,” says Gravely. “Most of the conversion risk is in grass CRP — it’s easy to convert grass back to an ag commodity.”

After seeing the response of landowners and “how fast and vibrant” the trees are growing on GreenTrees projects, “we believe the risk (of landowners reverting to row crops) is even lower. That’s not only because of the size and density of the 15-year-old forest but also because of the additional economic values that have been created.”

That combination spurred GreenTrees to create a “production lease” for 15 years that would be the same time as the landowners’ 15-year CRP contract. As with the original GreenTrees leases, the new version requires that landowners “agree to a specific silvicultural planting of 302/302 (cottonwoods/hardwoods per acre). And, in the lease, we give them A-Z on how it supposed to be planted.

“They’ll follow a kind of ‘GreenTrees for Dummies’ silvicultural script that provides them with a very high establishment but also gets the cottonwoods and hardwoods growing very rapidly right out of the gate. Plus, we give them on-the-ground personnel assistance at no cost to help with the USDA, hire the qualified tree planter and oversee the planting.”

Greening of commerce

U.S. companies are increasingly interested in carbon footprints. Among the largest is Wal-Mart.

“The history of Wal-Mart’s interest in this is interesting,” says Van Voorhis. “Our business partner’s mother used to be chair of the National Fish and Wildlife Foundation. At that time, the NFWF got Wal-Mart to invest in a program called Acres for America where, for every acre of developed space, Wal-Mart wanted to get at least 1 acre under conservation. At that time, Wal-Mart was being beaten up pretty bad for everything from healthcare issues to labor stances. Eventually, I think they got 2 acres for every one that was developed.”

Wal-Mart found that being proactive on conservation and the environment actually benefited their stock. Since then, the company has “branched out further saying, ‘being a good steward translates into economics.’ So, now, when Wal-Mart says, ‘We want (suppliers to adhere) to these specifications,’ it can change a market. They’re the dominant player. … If Wal-Mart says ‘we want 1 million tons of offsets,’ that’s when landowners and the program will come into play.”

For GreenTrees, “it isn’t about money for existing trees,” says Gravely. “It’s about producing carbon and that voluntary market is still very much alive and kicking. There are still a lot of companies and organizations — just like with Wal-Mart… — that are seeing bottom line benefits.”

GreenTrees, as a result, is also benefiting.

“The story of reforestation is a very good public relations story. The project is designed for carbon sequestration as a foundation. It checks all the high standards and protocol boxes and is working: trees are growing and properties are being converted into beautiful forests. The potential has now been demonstrated. Carbon isn’t some kind of hoax, but a true, bona fide market under the right type of project.”

Cap-and-Trade

It may surprise some that the GreenTrees representatives don’t see the incoming wave of Republicans to Congress as a definite killer for climate legislation.

“The concept of cap-and-trade as the world knows it now was borne out of the 1990 Clean Air Act reauthorization,” says Van Voorhis. “It was something pushed by President George HW Bush as a market way to deal with sulfur dioxide (SO2) compliance.”

Within five years of that program being implemented, acid rain in the United States was reduced by 70 percent. Sulfur dioxide is mostly generated at the utility level while the causes of carbon dioxide are much more varied and complicated.

Van Voorhis doesn’t claim that cap-and-trade is the cure-all for global warming. Instead, it’s “just a tool in the toolbox. And it’s an effective tool in some circumstances and there are other systems — fuel taxes or something else — could be implemented to handle those types of emissions.

“What’s never happened, from our viewpoint, is taxing emissions at a stationary level. If you tax something, it goes into the general treasury and you usually never reallocate those monies back out. There isn’t a whole lot of precedent showing that a tax has ever lowered emissions. A tax raises revenue and how that money is spent is the devil in the details.”

He believes cap-and-trade, in its classical sense, is still on Congress’ table.

“Where it was derailed was when the term ‘cap-and-tax’ was being bantered around. That’s actually true when the government says, ‘here’s the cap,’ and then provides an allowance so you can submit X amount per year. Originally, the government wanted to auction (such allowances) off 100 percent. So, it would have been basically a floating tax. Historically, allowances are given away for free, not auctioned. That is the classical brand of cap-and-trade.

“The challenge will be: is cap-and-trade such a divisive political issue that no one wants to touch it and should be left to the command and control of the EPA? Or, will it be rebranded and sent back to its more classical version? I’m not sure which way the wind is blowing on that. But, one thing is for sure, cap-and-trade is a Republican idea. The question is what will they do with it?”